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By September 14, 2017 0 Comments Read More →

Offshore Wind now Cheaper than Gas and Nuclear

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DONG Energy’s Burbo Bank Extension offshore wind farm. Photo courtesy of DONG Energy.

There are consistent howls from the likes of Jacob Rees-Mogg and Owen Paterson whenever renewable energy is mentioned, together with a patronising comment that it has its part to play in the greater scheme of things, but will never meet the mass needs of the UK. It’s often suggested  that wind turbines are more damaging to our countryside than global warming, yet without a change in our energy provision that countryside will be unrecognisable in a hundred years if we don’t take action now. The various sources of renewable energy remain broadly the same cost once the initial investment has been made, and government’s own advisers have said repeatedly that in the near future renewable energy will be the most cost-effective option for the UK. With improvements in energy storage this prediction is now beyond question, but what will it take to achieve an energy source for the UK based on renewables? The answer has to be support from the government, and a stop to complaining about the subsidies renewables attract, while all the time hiding the real costs to the consumer of both gas and nuclear, whether to the environment, in clearing up the mess when decommissioning a nuclear plant, or with regard to the ridiculously high cost to the consumer of power from the proposed Hinkley Point C reactor, if it ever becomes operational. Consequently, it’s really good whenever there is an affirmation not just of the benefits of renewable energy, but also of the falling cost to the consumer, and that has been the case just this week, and not as usual in Germany, but here in the UK.

On Monday, RenewableUK, the trade and professional body for the wind, wave and tidal energy industries. is highlighting a dramatic fall in the cost of offshore wind in the results announced today of competitive auctions for new contracts to provide clean electricity. The Department for Business, Energy and Industrial Strategy has announced that 3 offshore wind projects were successful, as they put in the lowest bids for Contracts for Difference (CfDs). The winning projects are DONG Energy’s Hornsea 2 off the coast of Yorkshire, Innogy and Statkraft’s Triton Knoll off the coast of Lincolnshire, and EDPR and ENGIE’s Moray off the northeast coast of Scotland. The new wind farms, with a total capacity of 3,196 megawatts, will power the equivalent of more than 3.3 million homes.

The cost of offshore wind has plummeted since the last competitive auction results were announced in February 2015, with the new prices on average 47% lower than they were just over two and half years ago. The offshore wind prices announced today are cheaper than the cost of the 35-year contracts for new nuclear power of £92.50 per megawatt hour, and cheaper than the levelised cost of gas, according to figures from the Department of Business, Energy and Industrial Strategy.   

Hornsea 2 and Moray will begin generating in 2022/23 at £57.50 per megawatt hour, and Triton Knoll in 2021/22 at £74.75 per megawatt hour, with prices guaranteed for 15 years of an expected project life of 25 years. Welcoming the results, RenewableUK’s Chief Executive, Hugh McNeal, said: “We knew today’s results would be impressive, but these are astounding. Record-breaking cost reductions like the ones achieved by offshore wind are unprecedented for large energy infrastructure. Offshore wind developers have focused relentlessly on innovation, and the sector is investing £17.5bn into the UK over the next 4 years whilst saving our consumers money. Today’s results are further proof that innovation in the offshore wind industry will bring economic growth for the UK on an industrial scale.”

“The UK needs to establish new trading opportunities as we leave the European Union, and the UK’s offshore wind sector is a world leader in a global renewable energy market currently worth $290 billion a year. Today’s results mean that both onshore and offshore wind are cheaper than gas and nuclear. But this young, ambitious industry can go even further. The Government can help us by continuing to hold fiercely competitive auctions for future projects, as it has promised, and by putting offshore wind at the heart of its upcoming Industrial Strategy. Congratulations to the successful bidders: DONG Energy for Hornsea 2, Innogy and Statkraft for Triton Knoll and EDPR for Moray. These projects are the powerhouses of the future. It’s great to see these excellent results for offshore wind. It’s important that innovative renewable technologies, including wave energy and tidal energy projects also have a route to market, so different mechanisms are needed to ensure these cutting-edge technologies can develop. Tidal energy projects are already showing cost reductions and with the right encouragement can undergo the same sort of journey as offshore wind. Onshore wind is the cheapest form of new power, so it deserves an opportunity to compete too”.  

About the Author:

Paul Melnyczuk is editor of Home Farmer, and together with Ruth Tott is the founder of the company. His Ukrainian father and Austrian mother came over in the 1950s, and he was raised near Accrington (of Stanley fame) in Lancashire. With a degree in European Literature and a year spent living in Sweden, and a further 2 years in the Sudan, his background is rich and varied.

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